Note 12

Income Taxes

The components of income tax expense were:


	Three Months Ended June 30,					Six Months Ended June 30,
(Dollars in Millions)	2014		2013			2014			2013
Federal
Current	$	421	$	626		$	911		$	1,116
Deferred		38		(104	)		(29	)		(92	)
Federal income tax		459		522			882			1,024
State
Current		84		19			167			77
Deferred		4		(12	)		(6	)		(14	)
State income tax		88		7			161			63
Total income tax provision	$	547	$	529		$	1,043		$	1,087

A reconciliation of expected income tax expense at the federal statutory rate of 35 percent to the Company’s applicable income tax expense follows:


	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in Millions)	2014			2013			2014			2013
Tax at statutory rate	$	719		$	690		$	1,387		$	1,371
State income tax, at statutory rates, net of federal tax benefit		58			4			101			40
Tax effect of
Tax credits and benefits, net of related expenses		(184	)		(112	)		(349	)		(218	)
Tax-exempt income		(51	)		(53	)		(103	)		(107	)
Noncontrolling interests		(5	)		15			(10	)		29
Other items		10			(15	)		17			(28	)
Applicable income taxes	$	547		$	529		$	1,043		$	1,087

The Company’s income tax returns are subject to review and examination by federal, state, local and foreign government authorities. On an ongoing basis, numerous federal, state, local and foreign examinations are in progress and cover multiple tax years. As of June 30, 2014, the federal taxing authority has completed its examination of the Company through the fiscal year ended December 31, 2010. The years open to examination by foreign, state and local government authorities vary by jurisdiction.

The Company’s net deferred tax liability was $1.6 billion at June 30, 2014, and $1.3 billion at December 31, 2013.